Dapice Incorporated makes a single product--a critical part used in commercial airline seats. The company has a standard cost system in which it applies overhead to this product based on the standard labor-hours allowed for the actual output of the period. Data concerning the most recent year appear below: Budgeted fixed manufacturing overhead $ 76,815 Budgeted hours 13,500 labor-hours Standard hours allowed for the actual production 14,400 labor-hours The fixed overhead volume variance is:. A) $5,121 U
B) $5,121 F
C) $21,121 F
D) $21,121 U

B. $5,121 F

Explanation:

With regards to the above,

The fixed overhead volume variance is computed as;

First, we' all determine the applied fixed overhead.

Applied fixed overhead = Actual production labor hours / Budgeted hours × Budgeted fixed manufacturing overhead

= 14,400/13,500 × $76,815

= $81,936

Therefore,

Fixed overhead volume variance = Applied fixed overhead - Budgeted fixed overhead

= $81,936 - $76,815

= $5,121 F

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